Tonight Nintendo is discussing its current earnings predicament with analysts and investors. Most gamers have already heard the news that the Wii U is not doing well, and the 3DS, despite healthy overall sales, is seeing stagnant growth. The end result is Nintendo has lost some money. They have a huge war chest of funds to keep them healthy for quite a while, the same war chest that fended off a Microsoft buyout in the past, but the company cannot sit back and rest on the money it made in previous generations. The question then that armchair analysts and critics alike have been posturing on is how does Nintendo fix the problems that are causing them to lose money?
(Image of Nintendo President Mr. Iwata courtesy of Toru Hanai / Reuters)
Knee-Jerk Reactions
There has been no shortage of commentary on Nintendo's predicament. Major news outlets like Time as well as smaller tech-centric blogs like Techno Buffalo have all had things to say about what Nintendo should do with Wii U. Some of the comments and opinions have focused on an extreme scenario where Nintendo, after only a couple of unprofitable months following years of profitability and high dividends, would immediately dump their hardware manufacturing arm for a software only model, similar to Sega after the Dreamcast tanked. That is wishful thinking though for people who want Nintendo software without paying for the hardware.For starters, Nintendo's situation is dramatically different than Sega's. Nintendo is still flush with cash, so there is no immediate need to do anything that drastic. Additionally to think Wii Sports would have been such a cultural phenomenon on any system other than the Wii is laughable. Nothing even close in terms of play-ability and financial success (according to VGChartz, Wii Sports has moved over 81 million units, many of which were sold with the console itself) has ever been produced for Microsoft's Kinect peripheral or Sony's Move. The same can be said for less important but still relevant games like Mario & Luigi: Dream Team or The Legend of Zelda: A Link Between Worlds on 3DS. Those games could never have been done on a handheld other than Nintendo's flagship dual screen, and both are over a million units sold. The combination of Nintendo's available funds and their ability to craft and curate experiences specifically for their devices and controllers makes this idea of abandoning hardware illogical to me and many others. They are in a similar situation to Apple in that they build experiences for their devices, not for devices that other companies have built.
One other problem I have with people stating as fact that Nintendo moving to other consoles or mobile devices such as tablets and smartphones would bring in ridiculous sums of money is lack of evidence. Admittedly there is no evidence to refute these claims either, but that is the major issue. Nintendo has no guarantee that any of us have seen that if PS4 had Nintendo titles or if iPad had Nintendo titles that they would sell with the runaway success some people have predicted. One firm went as far as putting a $2.7 billion profit tag on a mobile push by Nintendo, but I am not aware of any consumer surveys or marketing predictions that can justify these claims. I would actually love to see Sony or Apple in particular run a survey of their respective install bases asking franchise by franchise if players want to see a Mario game on their hardware, a Zelda game, a Metroid game, legacy games from previous generation Nintendo consoles, etc. I think this would be enlightening but also never expect it to happen.
(Donkey Kong Country: Tropical Freeze promotional image)
What is Nintendo Really Going to Do?
In the near term, Nintendo President Mr. Satoru Iwata has taken a 50% pay cut and announced smaller but still significant cuts for other top executives for the next five months. He has apologized and stated that Nintendo is evaluating reform within the company to right the sinking Wii U ship alongside a stock buy back to shore things up further. This is great, but it has not given us much to calm the rumor mill with.What we do know is Nintendo has some strong Wii U titles in the pipeline for 2014, and through recent earnings it was revealed that the attach rate of the Wii U is actually not terrible (Wii U attach rate is sitting just over five software titles per console sold, a better attach rate than 3DS currently has). I suspect that Nintendo is hoping Donkey Kong Country: Tropical Freeze in February and Mario Kart 8 in Q2 can bring a little life to their home console while they figure out what to do next. Bayonetta 2, Super Smash Bros, X, the next Legend of Zelda entry, and several other games have been announced but not dated. The sooner the better for Nintendo because these have the potential to be system sellers and at least get Wii U off of life support. The 3DS has a few strong titles early in the year like Bravely Default from Square Enix; however, it is much less of a concern with its install base of over 42 million units. The new 2DS system actually seems to be attractive to new emerging markets like China, so Nintendo may continue to rely on the handheld's sales to keep losses low while they attempt to figure out the Wii U.
What Would I Like Nintendo to Do?
A big reason behind why I am writing this piece is because I have plenty of complaints and ideas myself. Despite having some exposure to business practices and technology markets, I do not claim to be an expert providing magic beans to fix all of Nintendo's ailments. These are my opinions as both a fan and an owner of multiple 3DS handhelds and a day one Wii U Deluxe.
(Bayonetta 2 promotional image)
Games
Some of you may recall I previously wrote about some of the post launch reception Wii U received. I will not rehash that, but suffice it to say I agree with everyone who said Nintendo bungled the launch. There were no must own titles for the first five months of the console's lifespan (Lego City Undercover is still my favorite game for the system and was released in March 2013), and the initial message was muddy and confusing (many have said Wii U and Nintendo's refusal to show off the console itself caused confusion that still lingers today with people who believe the Wii U is simply an optional tablet controller for the original Wii console). In the second half of 2013, Nintendo shipped Pikmin 3, The Legend of Zelda: Wind Waker HD, and Super Mario 3D World, all excellent games, while Platinum Games shipped The Wonderful 101. Third parties also contributed games like Assassin's Creed, Batman Arkham Origins, Scribblenauts Unmasked, and the latest Call of Duty and Skylanders games. People are still saying that is not enough, so what is enough?
The short answer is for critics it will never be enough. Even with Donkey Kong Country, Mario Kart 8, and Bayonetta 2, there will still be detractors. I think Smash Bros, the next Legend of Zelda, X, and other games are further off and cannot be relied on near term to fix the problems. I actually think Nintendo needs to lean on Indie developers and its eShop in the near term. Shovel Knight, Teslagrad, Tengami, Armillo, Q.U.B.E. Director's Cut, and several other games (check out this sizzle reel on YouTube) look extremely promising and will cost substantially less than $50 - $60 retail titles. There are plenty of existing Indie titles that are fabulous on Nintendo's eShop already that Nintendo could feature, such as Toki Tori 2+, Little Inferno, The Cave, and Runner 2. Sony has done really well showcasing Indie's on their platforms, and Nintendo could benefit from similar outreach and focus. They have started the behind the scenes work with Indies, but I would love to see a more public forum where Nintendo expresses their dedication to independent games and studios.
One aspect of the games that has been missing is a Game Pad seller. Aside from off-screen TV, which is wonderful by the way, most games fail to take advantage of the Game Pad to any interesting extent. I think ZombiU, Lego City Undercover, and Batman Arkham Origins do the best job currently, but what I would love to see is a strategy game that allows you to move units strategically on the Game Pad. Fire Emblem would be perfect for this. I have no idea if Shin Megami Tensei X Fire Emblem will utilize this, but I hope it does. This game may or may not be released in 2014, and it could be spectacular or possibly too complex to enjoy given its parents' pedigree. I would love to see strategic battles play out on the TV after mapping my moves on the Game Pad though. (UPDATE: The investor briefing just wrapped before I published this piece, and Nintendo addressed the Game Pad's lack of effective use. Suffice it to say Nintendo and I agree on this one!)
(Nintendo eShop logo)
Infrastructure
This has always been a hot button issue for me. There is no denying Nintendo has always been way too conservative in terms of network capability and account features. Only recently did Nintendo Network IDs migrate to the 3DS, allowing for a shared wallet across Wii U and 3DS eShops. Besides that though the system is still sorely lacking. If your console ever breaks or is stolen, you have to call Nintendo directly and work with them to retrieve your previously purchased digital content. Nintendo only recently removed a restriction on 3DS where you could perform content and data transfer between systems a total of 5 times. That welcome change aside, this content should be stored in a protected cloud environment that is accessed through your account. The problem is purchases are tied to an individual console and not the console owner, putting Wii U and 3DS far behind similar systems managed by Valve, Microsoft, and Sony. Additionally saves are stuck on 3DS cartridges (for physical games and internal memory for digital) or internal memory on Wii U. I once tried to copy a save file for a friend to use with his own copy of ZombiU only to find out that was not allowed. We cannot even copy save files. This seems so counter-intuitive to me. Why would Nintendo want to prevent customers from accessing saved data and purchases from multiple consoles? It can be protected and limited to just your account if they wanted to do that, but they have not shown any interest yet, even stating at times that they have not heard or seen substantial interest in these features from developers despite consumers asking for it. I would think developers want whatever gets more consumers interested in the hardware that their software operates on. Microsoft and Sony have embraced cloud gaming, as has Valve through their Steam platform, all allowing an account to be accessed from multiple devices with all features and content available (for more details on how those companies manage this activity feel free to visit the respective company's support pages).
Another big boon would be allowing cross purchasing and cross play functionality between 3DS and Wii U. Nintendo should leverage the much larger 3DS install base to drum up interest in the Wii U. Re-purchasing Virtual Console or Indie digital titles for full price on both systems is tough to swallow. I would love to see at the very least a discount or some acknowledgment that Nintendo is aware I bought the title once already. Sony again has won people over through their ability to do this with PS Vita and PS3/4. That functionality has sold systems for them.
Finally adding what other systems have as default functionality should not need to be asked for in this day and age. Account level accomplishments view-able at the profile level, operating system level voice chat that can be sustained in games and out of games, and more capable messaging functionality should all be available. Currently Miiverse is cute, but most of it is clutter and useless in actually managing content or sharing data in a meaningful way with friends. Batman Arkham Origins attempted to create a way to share accomplishments by auto posting to Miiverse, but the majority of the automated posts include a black box screenshot instead of a legitimate shot of the action. It is a nice attempt, but it should not be needed at all. All of the listed features would be welcome improvements to a system in need of getting back to basics though.
Conclusion
I have probably missed a few things that I like to rant and rave about, but this hopefully was an enjoyable, albeit lengthy, opinion on how the Wii U can improve from a fan of Nintendo. I honestly believe Nintendo's continued support of family friendly games and couch co-op gameplay should be celebrated. Nintendo constantly produces high quality, brightly colored, vibrant games that anyone in my family can play in an industry where grim first person shooters released annually dominate. Nintendo's biggest priority should be reminding people why we all at one point in time or another loved them, not finding ways to abandon who they are.
UPDATE: As mentioned above, the investor's briefing has come and gone while I was preparing this piece. Nintendo mentioned two additional areas I did not consider: Quality of Life software and Intellectual Property licensing. Both are extremely intriguing, and from my point of view proves Nintendo is definitely thinking a little out of the box. Nintendo has shown interest in QOL/health software in the past with the Wii Fit platform and Vitality Sensor (though the Vitality Sensor was never commercially released). The Balance Board and Wii Fit Meter are solid products that I own and enjoy. Additionally new licensing deals could mean anything from allowing Activision to develop a Luigi game to allowing Archie Comics to start printing a Metroid comic, similar to their excellent Mega Man and Sonic comics. The possibilities there are endless with some being great and some not so great. We will have to wait and see how these pan out, but at least change is coming.
Until Next Time
- Scott
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